Stable-value funds are available only in 401(k) plans; as many as 80% of all plans, in fact, include them as an option. And therein lies the basis for a recent investor lawsuit and for an investigation by the Department of Labor, which oversees employer-sponsored retirement plans.

In 2008, the $1.8 billion JPMorgan Stable Asset Income fund had as much as 13% of its assets in private mortgages that were underwritten and rated by the bank itself. Stable-value funds routinely invest in mortgage-backed securities as well as Treasury and corporate bonds. The lawsuit, which has prompted the Labor Department's still-officially-unofficial investigation, alleges that JPMorgan (ticker: JPM) used its Stable Asset Income fund to overpay for toxic mortgages in an effort to get them off the bank's books and hidden in the stable-value fund. JPMorgan has filed for a summary judgment and motion to dismiss. In its memo to the court, JPMorgan claims "indisputable data [that] demonstrate that this allegation is simply incorrect." It collected data showing all of the 271,000 transactions made directly or indirectly through the fund in the period in question, and it says that the fund did not purchase any private mortgages from a JPMorgan affiliate. If it did, that "self-dealing" would be in violation of the law that governs 401(k) plans.

In an e-mailed statement to Barron's, a JPMorgan spokesperson said, "No 401(k) participant has ever lost money nor experienced a negative return in any J.P. Morgan stable value product."

ALL OF THIS GETS AT THE TROUBLE with stable-value funds–their utter lack of transparency. They're not "40-Act" funds, which means they're not subject to any of the fee-disclosure or portfolio-holdings reporting that governs mutual funds. In fact, these funds basically aren't required to disclose anything -- and yet they contain $645 billion of employee money.

Assets in stable-value funds have increased more than 50% since 2007, when they held $416 billion, and they're catching up to the $883 billion in retail money-market funds, a figure that's been slowly shrinking. Low interest rates have made money-market funds, which now yield 0.03% on average, less attractive.

Stable-value funds invest in higher-yielding, longer-term securities than money-market funds; their average duration is three to five years. But it's the insurance wrapper that smooths any interest-rate volatility and meets portfolio requirements that add up to higher returns. Last year stable-value funds returned an average of 2.66%.

Despite the Labor Department's investigation, it's unlikely that we'll see a wholesale discrediting of stable-value funds. But their quiet heyday may be coming to an end, says Michael Alfred, the founder and CEO of Brightscope, an organization that evaluates 401(k) plans. "The Department of Labor is scrutinizing more and more, and their bias is toward more disclosure," Alfred says. "In an environment moving toward total transparency, stable-value funds are the antithesis of that. They're completely opaque."